ASTLW — Algoma Steel Group Inc.

Summary of Algoma Steel Group Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Shipments: Approximately 224,000 net tonnes, down 52.4% year-over-year due to the transition from blast furnace to electric arc furnace (EAF) operations.
• Steel Revenue: CAD 266.9 million, a decrease of 42.4% from the prior year, primarily due to lower shipment volumes.
• Average Net Sales Realization: CAD 1,193 per tonne, up 21% from CAD 986 per tonne in Q1 2025, driven by a shift towards higher-value plate products.
• Cost per Tonne: CAD 1,180, slightly up from CAD 1,137, impacted by CAD 27.4 million in tariff costs and reduced fixed cost absorption.
• Adjusted EBITDA: Loss of CAD 28.7 million, improving from a loss of CAD 46.7 million in the prior year, reflecting a better product mix.
• Liquidity: Ended the quarter with CAD 65.3 million in cash, CAD 195 million unused on the revolving credit facility, and CAD 292 million under LETL facilities, totaling approximately CAD 553 million in available liquidity.

2. Strategic Updates and Business Highlights:

• Algoma permanently halted blast furnace operations on January 18, 2026, transitioning to a fully EAF operation.
• Record plate sales of 116,000 net tonnes were achieved, with a focus on higher-value products for infrastructure, construction, and defense markets.
• Announced the formation of Roshel Algoma Defence, a joint venture aimed at producing ballistic steel in Canada, enhancing product diversification.
• Signed a binding MOU with Hanwha Ocean for a potential USD 250 million structural beam mill project, contingent on contract awards.

3. Forward Guidance and Outlook:

• The company expects to see improved performance as EAF production stabilizes and transition-related costs decrease, with a path towards breakeven EBITDA by Q4 2026.
• Anticipates a linear reduction in capacity utilization charges from CAD 90 million in Q1 to zero by Q4.
• Positive cash flow items expected in 2026 include approximately CAD 200 million from income tax refunds and remaining insurance proceeds.

4. Challenges and Points of Concern:

• The company remains highly exposed to U.S. tariffs, incurring CAD 27.4 million in direct tariff costs this quarter, although this was a reduction from the previous quarter.
• The Canadian steel market is characterized by oversupply, particularly in the coil segment, which pressures pricing and limits profitability.
• Transitioning from legacy operations has led to elevated costs and operational complexities, impacting overall performance during the quarter.

5. Notable Q&A Insights:

• Management confirmed that capacity utilization adjustments will trend down linearly, with expectations for breakeven EBITDA by Q4.
• Shipments are expected to be slightly lower in Q2 due to ongoing market conditions, particularly in the sheet segment, while plate volumes are anticipated to increase.
• Discussions are ongoing regarding overseas sales strategies, with expectations for developments towards the end of the year.
• The defense market in Canada is seen as a growing opportunity, though it remains a smaller segment compared to other industrial applications.

Overall, Algoma Steel is navigating a significant transition with its EAF operations, focusing on strategic partnerships and product diversification while managing the challenges posed by tariffs and market conditions.